Future of Houston-area shopping malls discussion (The Woodlands, Center: sales, real estate, for rent)

[LocalPlanner]

So there's a lot of discussion in the world of commercial development and finance these days that enclosed shopping malls are on the downswing or even on the verge of dying out altogether. Sometimes that language seems a bit hyperbolic, but no one can deny that the array of malls the Houston region enjoyed up to the mid-1990s has been having a shake-out in the last 20 years.

I theorize several reasons for this: the rise of big-box strip mall / power center stores which sucked sales to middle-income shoppers away from higher-priced mall tenants (especially the in-line smaller tenants on which the malls are wholly reliant for rent income); the subsequent rise on on-line shopping; the changing residential demographics and level of spending power in some mall trade areas; the shrinking middle class; over-malling (too many malls built for the population); changing consumer tastes regarding the social aspect of the mall experience; the rise of new types of retail formats (walkable town centers in particular) etc etc.

At this point Houston is down to four "fortress malls" or those which dominate the scene: The Galleria, Memorial City, Baybrook, and The Woodlands. These are malls that show every sign of continued success. Then there are a slew of malls that are dead, dying, or scheduled for redevelopment: Sharpstown, Greenspoint, Almeda, Northwest, West Oaks, San Jacinto, Mall of the Mainland. In between you have First Colony, Willowbrook, and Deerbrook, which aren't doing badly but can't be grouped with the apex malls. Then there's the outlet malls (3 major ones, only one indoor) and some niche locations like the Shops at Houston Center and downtown tunnels, but I'm not really focusing this discussion on those.

In your opinion, what do you see as the overall role of indoor malls in the Houston area going forward? Do you see them continuing to be the cores of development and the shopping / social lives of area residents? What about those three "malls in the middle" I identified above? Do you like going to malls, and why or why not? Does Houston need some new indoor malls?

Discuss!

[cheryjohns]

Limited time = online shopping for me. I do the strip center (Best Buy, etc.) if shopping physically - again, because of time, in and out fast.

Mall shopping is so time consuming - haven't been in a regular mall in a long time.

[LocalPlanner]

Originally Posted by cheryjohns

Limited time = online shopping for me. I do the strip center (Best Buy, etc.) if shopping physically - again, because of time, in and out fast.

Mall shopping is so time consuming - haven't been in a regular mall in a long time.

That reminds me of another factor that I didn't mention - more women work these days and have less time to wander malls than in the 1970s and 1980s.

[HookTheBrotherUp]

Well, this is not really Houston related, except for the names of the malls. However, I will say that the decline of the enclosed mall is all about what you stated... online retail, suburb strip centers, etc. But also electricity is getting expensive, the owners have to pass that cost on to the retailers, who pass it on to us. Real estate prices continue to climb as well which results in a higher property tax, and again, that is passed on to us.

I think many retailers have figured out that instead of having to 'chip in' and pay for the electricity and property taxes for the entire mall, maybe they are better off just opening up their own store and paying for themselves only.

I think the big malls need to make some changes, and enforce some types of standards (if they want to keep me in there). I tried to find the Sony store last month in the Galleria, but it was gone. They left for whatever reason, so one less reason for me to shop there.

But the main thing I see at the Galleria is the dumbing down, or lowering the bar for retailers. There are still great stores in the Galleria, but if they have to stoop low to attract all those cart type shops to pay the bill, then they are getting desperate. This is the trend that I saw with the other malls that have now closed, or are almost dead as you say. I remember Westwood Mall, Town and Country Mall, etc. West Oaks Mall also is on that path. When you see the carts with people who can't speak good English, then its going down hill.

But what they have to control now is the people they attract. Every time I go to the Galleria on a weekend, I see a bunch of hood rats, many who don't buy anything. And also, I don't like that the Galleria has become a Quinceanera magnet. If I want that culture, I'll go to see Folklorico dancers. Their parents just drop them off after the mass to seek attention at the mall before the party later in the evening. I never see adults with them. Oh well, my little girl thinks their dresses are 'pretty'.

[LocalPlanner]

Originally Posted by HookTheBrotherUp

Well, this is not really Houston related, except for the names of the malls. However, I will say that the decline of the enclosed mall is all about what you stated... online retail, suburb strip centers, etc. But also electricity is getting expensive, the owners have to pass that cost on to the retailers, who pass it on to us. Real estate prices continue to climb as well which results in a higher property tax, and again, that is passed on to us.

I think many retailers have figured out that instead of having to 'chip in' and pay for the electricity and property taxes for the entire mall, maybe they are better off just opening up their own store and paying for themselves only.

I think the big malls need to make some changes, and enforce some types of standards (if they want to keep me in there). I tried to find the Sony store last month in the Galleria, but it was gone. They left for whatever reason, so one less reason for me to shop there.

But the main thing I see at the Galleria is the dumbing down, or lowering the bar for retailers. There are still great stores in the Galleria, but if they have to stoop low to attract all those cart type shops to pay the bill, then they are getting desperate. This is the trend that I saw with the other malls that have now closed, or are almost dead as you say. I remember Westwood Mall, Town and Country Mall, etc. West Oaks Mall also is on that path. When you see the carts with people who can't speak good English, then its going down hill.

But what they have to control now is the people they attract. Every time I go to the Galleria on a weekend, I see a bunch of hood rats, many who don't buy anything. And also, I don't like that the Galleria has become a Quinceanera magnet. If I want that culture, I'll go to see Folklorico dancers. Their parents just drop them off after the mass to seek attention at the mall before the party later in the evening. I never see adults with them. Oh well, my little girl thinks their dresses are 'pretty'.

I didn't go into a long discussion of mall economics in the opening post, but your point about electricity falls into the category of "common area expenses", which are high at indoor malls. Also, the mall anchors, such as the department stores, usually pay little or no rent (and often own their own sites outright), so the vast majority of the burden of common area expenses fall on the in-line tenants. Which reminds me of another factor: some traditional mall anchors have been having a pretty hard time themselves (ahem, Sears and JC Penney) and others disappeared altogether (Mervyn's, Montgomery Ward, etc.).

By "carts" do you mean kiosks?

And you know, Hispanics and other non-Anglos make up a majority of the regional population anymore, so isn't that who you should expect to be in a mall? And teens have always been major patrons of malls, and they didn't buy much except snacks and arcade plays.

[HookTheBrotherUp]

Originally Posted by LocalPlanner

I didn't go into a long discussion of mall economics in the opening post, but your point about electricity falls into the category of "common area expenses", which are high at indoor malls. Also, the mall anchors, such as the department stores, usually pay little or no rent (and often own their own sites outright), so the vast majority of the burden of common area expenses fall on the in-line tenants. Which reminds me of another factor: some traditional mall anchors have been having a pretty hard time themselves (ahem, Sears and JC Penney) and others disappeared altogether (Mervyn's, Montgomery Ward, etc.).

By "carts" do you mean kiosks?

And you know, Hispanics and other non-Anglos make up a majority of the regional population anymore, so isn't that who you should expect to be in a mall? And teens have always been major patrons of malls, and they didn't buy much except snacks and arcade plays.

Race is not an issue, I said hood rats, that encompasses all who are 'hood rats'. All are represented for sure.

[Milton Miteybad]

If Houston has only four viable shopping malls out of fourteen (not an altogether unreasonable appraisal), then how could we conclude that any more are needed by the marketplace?

A developer/builder might think another mall is needed, for reasons mostly unrelated to retail shopping...but the prima facie evidence suggests we have too many malls already, relative to the dwindling number of shoppers who actually still visit them.

[LocalPlanner]

Originally Posted by Milton Miteybad

If Houston has only four viable shopping malls out of fourteen (not an altogether unreasonable appraisal), then how could we conclude that any more are needed by the marketplace?

A developer/builder might think another mall is needed, for reasons mostly unrelated to retail shopping...but the prima facie evidence suggests we have too many malls already, relative to the dwindling number of shoppers who actually still visit them.

And I didn't even mention the four malls that have already been redeveloped (Town & Country, Northline, Gulfgate, and Westwood).

[curbur]

changing consumer tastes regarding the social aspect of the mall experience; the rise of new types of retail formats (walkable town centers in particular) etc etc.

I can't speak to all the factors as to why there's decline, but this is certainly going to be the model going forward. Now will this model prove tiresome or overdone 15-20 years in the future? Maybe so, but at least for now there's a growing desire for urban walkable centers where the lines between living, working, and playing (or in this case spending money at a store or restaurant) are not separated. Just like with large 'fortress' malls today, there will certainly be haves and have nots 'town centres' since there will likely be too much commercial sq footage to fill in all the suburbs with the kinds of stores tailored for these developments.

You can already kind of see it, any inner loop walkable area like Rice Village or the heights shopping area, and perhaps even Market st. are getting quality, unique restaurants and shopping locations, whereas Vintage and La Centerra are able to get some good brands, but still have a lot of empty or under utilized commercial sq footage. Then there will be ones that are trying to jump onto the trend and don't even necessarily warrant having such a development in the vicinity where they're going up; a good example of this to me is Valley Ranch town center going up near Kingwood. They too are going for a more urban and walkable model for a retail/office district nearby suburban neighborhoods, but thus far have only been able to sign big box stores that likely would be more well suited for a strip mall anyways. There's a new 'town centre' type development going up at 99@I-10, Bridgeland plans on having a town centre some day and the commercial sq footage in their current plans is quite massive, and so does some of the other new MPC's as well. There's going to be too much for the given population in the immediate area, and some places will more than likely fail. Perhaps this will be a good test market for a lot of big box stores to try more urban settings for their stores since this is a trend going on all over America.

[Houston321]

I don't go to the mall anymore. I feel like I am in a third world country with people coming at me from all angles from their kiosks. Then, when I finally find safe harbor in the food court, I am peppered with numerous requests from people to try their food.


So if you see the clientele changing at the mall, I suspect this is one of the reasons. Most people coming to spend money want to be left alone, and will ask if they need anything.